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Tuesday, June 19, 2007

Your loss on Home may be considered taxable gain by IRS

The Kiplinger.com article discusses how homeowners who are losing their house to foreclosure may also get hit with the income tax. Reason - the difference between the mortgage loan amount and the lower amount that's recouped by bank on foreclosure may represent debt amount forgiven by the lender. However, in the eyes of IRS the foregiven debt is considered taxable income. Way to avoid this taxation on foregiven debt - the tax bill is forgiven if the homeowner is bankrupt or insolvent.

For complete article, check out:

Kiplinger.com: Lose Home, Pay More Tax

posted by Ruby @ 6:43 AM

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